Considerations in Small Business Insurance

Insuring a business has always been an offline activity and continues to be until now. The offline activities include understanding type of business insurance needs, what covers the business adequately, where & how to buy. The insurance agencies and brokers are gatekeepers and recommend the information.  There are two ways to verify your business has the right coverage, find the right broker or agencies or  occurrence of an unfortunate incident.

Considerations in Small Business Insurance

The business cycle looks something like this – conceptualize product/service, launch company, service customers and grow business. But between all this comes the requirement to be compliant and ensure that the business is covered in case of any unplanned events.

The insurance policies can range from a standard policy to meet minimum business requirements to covering key personnel and meeting client requirements.

But this process involves multiple items.  First, find referrals or look for insurance brokers or agencies. From there, an exchange of business information, coverage options, cost vs. value judgement ensue. The procedure continues through paperwork, signatures, and payments to getting the policy.

Time and effort to get to the point requires patience, paperwork, phone calls, research and more. The decision is fraught with multiple trade-offs, not exactly knowing if business insurance selected covers the business adequately?

Is Insurance Coverage Adequate?

So after all this, how does small business assess if their coverage is adequate? Until the business encounters an incident that challenges the business insurance coverage, all businesses are running on estimates whether the coverage meets all or part of their requirements?

Insurance comes in all forms, shapes and sizes. Whether it is business interruption, insurance covering events such as floods, fires, or coverage from loss of key personnel, fraud insurance and others. This introduces complexity and results in lot of business glazing over options. The insurance discussion becomes a product/service acquisition and cost and not coverage that decides the decision. Price becomes the singular factor that drives whether insurance is bought, not bought or not sufficient.

New approach to buying insurance

So as the business focuses on creating a product/service, it is important to ask itself the following questions:

  • What happens if product/service cannot be created on time?
  • How can the business deal with a loss – such as inability to service the customers?
  • Is there a way to protect the business against fraud?

There are more questions, such as type of business, size, revenue and other factors.  By self assessing, the business owner is in a better position to work with the insurance agents and companies in selecting and tailor the right policy.

The other method which is new and being provided by online insurance companies. They cover items such as type of organization, business scope, look at the unbundled business insurance options, to finally receiving a quote.

So in this new world the businesses are more in charge, whereby evaluating the needs and comparing it against quotes, the insurance technology finally starts to put the business owners in charge of the decisions.

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